5% tariff for sugar on 2015

PLANTERS and millers agreed that the gradual reduction of tariff on imported sugar is the most pressing concern facing the industry.

During the Negros Economic Summit initiated by third district Representative Alfredo Benitez on October 20 at Nature’s Village Resort, Talisay City, sugar industry leaders agreed that reduction of tariff on imported sugar will be from the present 38 percent to only 28 percent by January 1, 2012, 18 percent by 2013, 10 percent by 2014 and down to a nominal 5 percent on January 1, 2015.

Sugar leaders said increased productivity, lesser production cost and full realization of the sugarcane’s potential for electric power cogeneration and bio-ethanol production are the key to the sugar industry’s survival come January 1, 2015 when tariff is eventually lowered to a nominal five percent and producers face the threat of cheaper imported sugar.

Archie Amarra, a member of the Sugar Regulatory Administration’s board, was the resource speaker on the sugar industry.

Before 2015, the sugar industry should have addressed the problems of low production, high production cost, and sugar smuggling, Amarra said.

“The fragmentation of lands resulted to decreased production,” Amarra said adding farms of less than 10 hectares produce an average of only 50 tons per hectare while farms exceeding fifty hectares produce upwards of 60 tons per hectare.

In Negros, which produces more than half of the country’s sugar production, about 80 percent of the farmers cultivate farms of less than 10 hectares while less than 5 percent cultivate farms of more than 50 hectares.

There is an urgent need to consolidate the farms and mechanize farm operations to increase productivity and cut costs, the group pointed out.

“The industry must strive for a production of at least 75 tons per hectare and a yield of 2.2 50-kilo bags per ton cane to come up with 165 bags per hectare. Moreover, cost of production should not exceed P750 per bag for the industry to be competitive by 2015,” said Rey Bantug who presented the group’s recommendations.

The present environment of uncertainty in the adequacy of cane supply brought about by the seemingly interminable agrarian reform program of the government will hardly motivate mills to risk huge investments, Jose Villanueva of First Farmers said.

“Government should help farmers become more productive by helping them purchase farm inputs like fertilizer at a cheaper cost and by providing them with access to financing at low interest rates,” stressed Jaime G. Golez of the National Federation of Sugarcane Planters.

Mills should also be provided with financing and tax holidays to help them modernize, Golez added.

Instead of merely paying lip service to the electric power cogeneration and bio-ethanol production programs, government should take concrete steps in providing the much-needed assistance and incentives and in removing the bureaucratic stumbling blocks to the two programs so that the sugarcane industry can realize its full potentials, the group stated.

Representatives of the sugar group will meet with President Benigno Aquino III on November 3 during his visit in the province to push for government support for their recommendations.

Law to rationalize sugar industry

“To make the sugar industry more competitive, there should be a law to rationalize and put order into its operations,” Negros Occidental Governor Alfredo Marañon Jr. told sugar industry leaders and participants during the summit.

Sugar industry leaders attended the gathering to concretize preparations for 2015 when tariff on imported sugar is eventually lowered to only five percent.

When tariff on imported sugar is lowered to only 5 percent, the country will be swamped with cheaper subsidized imported sugar, mostly from Thailand. This will spell doom to the country’s sugar producers, more than half of which are in Negros.

Marañon, whose family had been in the sugar farming business for decades, cited the current practice of some sugarcane farmers of harvesting premature canes just to avail of the favorable prices at the onset of the milling season which started September 1.

While farmers avail of what appears to be favorable prices, they sacrifice productivity. If the canes are allowed to mature, they can yield more sugar and boost the country’s production, the governor explained.

Sugar yield since the start of milling has been at a miserable 1.4 to 1.5 50-kilo bag for every ton cane. Average yield for Negros in the past years is two bags per ton cane.

“In Australia, farmers cannot simply harvest their canes anytime they want. They have to conduct testing to ensure that the canes are ready for harvest before they can cut and mill their canes,” Marañon stated.

He recalled the years when farmers brought their canes to the nearest “siding” or rail transloading station where they will be picked up by trains or when farmers used to haul their canes by truck to the nearest mill, thereby saving on transportation cost.

“At present, we have farmers from Kabankalan transporting their canes to mills in northern Negros which are more than one hundred kilometers away. We even have farmers who transport their canes from Panay by RORO to have them milled here in Negros,” he said.

According to the governor, it is not the farmers but the owners of the fuel stations and the spare parts stores who are getting rich from this practice.

“There should be a law to put order into these industry operations,” he stressed.

Negros has 10 representatives who can spearhead the passage of the law.

Congressmen from Iloilo and other sugar-producing provinces are also expected to support the measure. The sugar industry can also lobby for support from other representatives and senators.

Moreover, Marañon chided the sugar industry’s research arm, the Philippine Sugar Research Institute Foundation which is funded by liens from the farmers and millers.

While the industry have been spending millions in conducting research to come up with high-yielding and the fancied nitrogen-fixing sugarcane varieties, there has been no study made on how to modernize and improve cane harvesting and milling.

“We are all aware of the manpower problems we face every harvest time. What will happen if we no longer have enough manpower for our harvest?” Marañon rhetorically asked. (Butch Bacaoco and Teresa Ellera-Dulla)

Published in the Sun.Star Bacolod newspaper on October 22, 2010.